Commercial real estate comes back

After the residential real estate market crashed a couple of years ago, many were worried about the other real estate shoe dropping. That is, there was concern that the commercial real estate market would also plunge. But things are much better now with this important part of our economy, says N.C. State University economist Mike Walden.

“There was a lot of hand-wringing over what was going to happen to the commercial real estate market. Some were predicting it was going to crash, just like the residential market. Now, clearly, the commercial market did pull back. But the good news is it did not have the big drop that many were expecting.

“And, indeed, commercial real estate activity appears to be coming back. In fact, activity there was up 50 percent last year.

“Now, admittedly, that was from a very low base. Also the activity does vary between markets. It’s much better in the faster-growing parts of the country, like the Triangle here in North Carolina, (and) much lower than other areas.

“But it looks as if we avoided that double punch from a decline in the residential market and a crash in the commercial market. And it really suggests, I think, some optimism, because if investors are willing to spend big bucks to expand a commercial building, that really means that they’re betting on an improved economy down the road.”